Blog

Supply Chain’s Role in Winning Sales

Recent second quarter reports show that sales were down from what was expected, so, for retailers, they have a higher inventory of old merchandise. And, partly due to those low sales numbers, many retailers have lowered their expected sales for the rest of the year. Higher inventory, lower sales projections—still, merchandise for the fall and winter is still being shipped from manufacturers, and this will lead to an overstock of inventory, both from poor second quarter sales and, now, inventory for the winter months.

When there’s high inventory, retailers will often mark down old product—and they will sometimes mark down new product, also, to create room. That means less profit from your merchandise. Instead, good supply chain management can allow retailers to still sell product at its best price, while still managing inventory stocks.

Here’s how.

Use Distribution Hubs to Balance New Inventory

Product shipped from manufacturers across the Pacific can’t be stopped now—it’s already on ships, heading towards retailers. And the fear is that your retail store won’t be able to house this. Rather than shipping all new product directly to retailers—thereby forcing them to lower costs on old product to make room—use distribution hubs as a filter, balancing minimum/maximum product-placement based on each retailer’s need. A good supply chain will allow goods to be shipped to retailers based on demand at a micro level.

Generate Ecommerce Sales for Older Product

Though you might struggle to move older product without greatly reducing the price, this is still valuable merchandise to many consumers, but you need to widen the market. Consider reversing the supply chain—sending product back to the distribution hub—and then encouraging ecommerce sales of that product. This increases your audience: rather than exposing that product only to the people who physically walk into your store, you expose the product online, an inexhaustible audience. It’s more likely this older product will move more quickly online, and you won’t have to worry about the physical space it takes up in your retail store.

Maximize Stocking Capability—Warehouse and Retail

No matter your flux in inventory, new merchandise or old, you need to be able to provide all options to consumers. Color, size, style: you can increase your sales if you can always offer exactly what the customer wants. To do this, you need to maximize your stocking capability both in the warehouse and in the store. While your floor should be welcoming to the consumer, your backrooms and distribution hubs should make the most of your space—using vertical space, stacking, and space utilization. You can increase the amount of product you have on hand, ensuring that a customer never leaves the store without the product they intended to buy.